Police probe alleged fraud by Easy Forex

The core of the complaint filed with the police is a NIS 500 million suit by five Easy Forex customers last year.

Sources inform ''Globes'' that the Israel Police has been conducting for several months a criminal investigation against online foreign exchange trader Easy Forex Ltd. The investigation was opened following a complaint in August 2010 by a company customer, Shmuel Rozovsky, who lost hundreds of thousands of shekels trading in the company's arena. He alleged that the company defrauded its customers by inducing them to think that they could make quick profits, when in practice, the company was fed by their losses.

In November 2010, the complainant was notified that the police had closed the file due to lack of evidence. He appealed against the decision to the State Prosecutor, claiming that "urgent enforcement action is required here," because "forex fraud, the subject of the complaint, has harmed and continues to harm a large public in Israel, and many people continue to fall into the forex companies' nets, losing huge amounts of money."

Copies of the appeal were sent to then-Israel Securities Authority chairman Zohar Goshen and the head of its enforcement unit, to the National Economic Council chairman Eugene Kandel, and to various law enforcement officials. A few months ago, apparently before a hearing of the appeal, at a direct order from Israel Police headquarters, the Police Fraud Unit set up a team to investigate the case.

Over the past few months, the team has consulted foreign exchange experts, economists, and legal experts in studying the issue. The investigators contacted the complainant's attorney, Adv. Nimrod Assif, for clarifications about the factual and legal aspects of the case. Assif confirmed to "Globes" that he was asked to provide clarifications in the context of the investigation, but he declined to provide additional details.

The core of the complaint filed with the police is a NIS 500 million claim filed by five Easy Forex customers last year, headed by Rozovsky. The complaint, and a request that the Tel Aviv District Court should approve it as a class-action suit, is based on the grounds that company customers lost hundreds of thousands, and even millions, of shekels within a short time. The complaint calls foreign exchange trading "forex fraud", and alleges that companies in the sector are fed by customers' losses.

Easy Forex filed a motion to dismiss the petition for a class-action suit, saying that it was "demagogic, full of baseless pronouncements and populist slogans, and factually and legally groundless." Easy Forex's lawyer, by Adv. Gilad Porat of Berkman Wechsler Bloom & Co. Law Offices says that the fact that the company is the counterparty to transactions, as a market maker, openly and explicitly appears in its contracts with customers, and that it is easy to prove that "Easy Forex has no wish, interest, or ability to cause its customers to lose money."

In another lawsuit, filed in January in the Haifa Magistrates Court by two former Easy Forex customers, Benjamin Tiktuk and Arie Levy Dash, the company is being sued for NIS 2 million compensation. The claimants said that they were unaware that in most cases Easy Forex was the counterparty in their transactions on its trading system.

Previous legal proceedings against several investors ended in an out-of-court settlement in December 2009.

The police said in response, "An investigation is underway in the case, and we have no intention of discussing the details of the case."

Easy Forex said in response, "We are unaware of any investigation. For a long time, a number of parties have been trying in any way possible to harm the company and extort money they don’t deserve from it."

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